Deal reached for CPP reform

Bill Morneau joined his provincial and territorial counterparts in Vancouver on Monday to discuss reforming the national pension program over concerns that some Canadians will struggle financially come retirement.

Under the agreement, contributions for a typical worker earning about $55,000 would initially increase by $7 a month, starting in 2019.

The move would also see a person’s maximum annual payout under the CPP climb by about a third, to about $17,500, up from the current benefits of about $13,000. Those increased contributions would be matched by employers.

“Quebec is in a different situation”, he said. Enhancing the Canada Pension Plan won’t be easy, but it will be worth it.

The debate will also explore whether it’s the right moment to start the process that would gradually upgrade the public pension plan.

Ontario Finance Minister Charles Sousa said after the meeting that what they achieved Monday was for Canada’s youth.

Sousa said the plan would replace the one his government had been working on.

“But on the other hand, I think the other question is: to what degree do things have to be watered down in order to reach consensus?”

Provinces will have until July 15 to officially sign on to the agreement before it becomes formalized.

Ontario has been the strongest backer of CPP expansion, with Premier Kathleen Wynne planning to bring in a separate provincial retirement plan if no reforms happen on the national level.

Could other provinces follow suit in the absence of a deal on CPP?

Heading into the federal-provincial meeting, it was still unclear whether Ottawa would piece together the minimum required provincial support for change.

Any enhancement to the CPP needs to address some key elements. The federal government needs Ontario’s help on changes, giving it a strong political voice in talks. It has touted a plan that would boost the CPP on earnings between 50 per cent and 100 per cent of the year’s maximum pensionable earnings threshold, with the ability for employers to provide a comparable workplace retirement plan in lieu.

He said people in the lower-income brackets receive help from the Guaranteed Income Supplement and Old Age Security, while those with higher incomes during their working years have usually stashed enough money for their golden years.

Conservative finance critic Lisa Raitt recently said Ottawa hadn’t provided evidence to show that there would be widespread benefits from an expanded CPP, nor had it explained the reason to get a deal done now.

Leitao is expected to put forward a proposal that will more selectively target those Canadian workers who are the least likely to save.